CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
14th Edition
ISBN: 9780357292877
Author: MOYER
Publisher: CENGAGE L
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Question
Chapter 17, Problem 10P
a.
Summary Introduction
To determine: The payment processing proposal that should be accepted.
b.
Summary Introduction
To determine: The
c.
Summary Introduction
To determine: The number of payments.
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Springer Products wishes to borrow $90,000 from a local bank using its accounts receivable to secure the loan. The bank's policy is to accept as collateral any accounts that are normally paid within 30 days of the end of the credit period, as long as the average age of the account is not greater than the customer's average payment period. Springer's accounts receivable, their average ages, and the average payment period for each customer are shown in the following table:
Customer
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Receivable
Average age
of account
Average payment
period of customer
A
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65 days
C
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D
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E
$14,000
50 days
60 days
F
$19,000
21 days
35 days
G
$30,000
10 days
30 days
H
$16,000
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Archer allows customers to use bank credit cards to charge purchases. The bank used by Archer processes all bank credit cards in exchange for a 3% processing fee. All credit card receipts deposited are credited to the company account on the day of deposit. Assume that on August 10, Archer sold and deposited $5,200 worth of bank credit card receipts. The cost of sales is $2,800. Record this transaction in the general journal.
If a company accepts credit cards, they must record the expense on their books. Please prepare the journal entries for the following scenario: Company A sells $480,000 on credit card sales. The credit card charges a 4.5% fee for the use of the card. The card company also deposits the cash into the company’s bank account the same night as the credit cards are accepted.
Chapter 17 Solutions
CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
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